San Francisco Frontiers - Italy holds breath for PM Draghi's next move in political crisis

Formerly anti-establishment Five Star (M5S), headed by former premier Giuseppe Conte, has been haemorrhaging support in the polls and parliamentarians, hurt by policy U-turns and internal divisions.

The decision to sit out the vote -- which political experts say is a tactical attempt to win back grassroots support ahead of the scheduled 2023 general election -- could push Draghi's already fractured coalition to collapse.

It could even bring forward national elections to later this year.

The government survived Thursday's confidence vote, but Draghi had previously warned on multiple occasions he would not carry on as premier without Five Star support.

Draghi met with Italy's President Sergio Mattarella directly afterwards, amid rumours he may be readying to step down.

- 'Last ditch compromise?' -

The vote was called on an aid package worth about 23 billion euros, designed to help combat rampant inflation. But it also included a provision to allow a garbage incinerator to be built in Rome -- something the Five Star has long opposed.

"Unless there is a last-ditch compromise, a formal government crisis looks inevitable," Lorenzo Codogno, a professor at the London School of Economics, said in a note.

The far-right has seized on the tensions, with both the anti-immigrant League -- part of Draghi's coalition -- and the opposition Brothers of Italy party saying new elections should be called.

Neither is likely to be keen to support a caretaker government, or a Draghi government without the Five Star in it, Codogno said.

It was unclear whether Mattarella would accept a Draghi resignation.

Analysts suggested he could instead ask the former European Central Bank chief to seek support from parties in a new vote early next week.

Such support could include Five Star, which has little interest in early elections that could see it perform poorly.

The Milan stock market closed down three percent after the political turbulence.

- Ball in Draghi's court -

Draghi was appointed prime minister in February 2021 by Mattarella and charged with carrying out key reforms required under the EU's largest tranche of post-pandemic recovery funds -- a package worth approximately 200 billion euros for Italy.

The government has since found itself embroiled in the war in Ukraine, taking a strong, pro-EU line, while battling soaring inflation at home.

Draghi's support of Ukraine, which includes sending weapons and backing EU sanctions, won a parliamentary confidence vote in June despite criticism from Conte that the policy risked fuelling an arms race.

Five Star won legislative elections in 2018 with an unprecedented third of the vote but is now facing an uncertain future with major internal fractures and is now polling at 11 percent.

Last month, the party -- which had represented the largest in parliament -- split, with Foreign Minister Luigi Di Maio starting a breakaway group.

Codogno told AFP he did not believe that Conte was seeking to bring down the government.

But, he noted, his party "wants to make headlines and make gains in the polls again by running opposition as if it were not in government".

Lorenzo Castellani, political science professor at Rome's Luiss University told AFP the ball was in Draghi's court.

The next few hours would reveal whether Draghi would stand firm on his refusal to carry on without the Five Star in his government or "is instead open to a very different" coalition make-up, which would save Italy from early elections.

Z.Sanchez--SFF